Refer to the graph shown. Areas C and D represent:
A. the loss of surplus by consumers resulting from a monopoly.
B. the cost to society of increasing output from Qm to Qc.
C. consumer surplus redistributed to the monopolist.
D. the loss of surplus by producers resulting from a monopoly.
Answer:
Two members of the Kenyan parliament from coffee-growing areas said that no firm
should have a monopoly to market Kenyan coffee. The retail coffee company Tetu
Coffee has sparked a storm in the industry by promising to earn the country Sh400
billion annually if given exclusive licenses to market Kenyan coffee. The members of
parliament said the coffee bean farmers should be free to sell their beans to the highest
bidder.
Read the text above to answer this question. Are the farmers in Kenya justified in being
upset with having a single coffee buyer?
A. Maybe; the single buyer may reduce quantity but also raise price of coffee beans.
B. Maybe; the single buyer may reduce price but also will raise the quantity of coffee
beans.
C. No; the single buyer will increase the price and quantity of coffee beans.
D. Yes; the single buyer will reduce both the quantity and price of coffee beans.
Answer:
If supply and demand both shift to the right, equilibrium quantity:
A. rises, but the equilibrium price may rise, fall, or stay the same.
B. falls, but the equilibrium price may rise, fall, or stay the same.
C. may rise, fall, or stay the same, but equilibrium price will rise.
D. may rise, fall, or stay the same, but equilibrium price will fall.
Answer:
Refer to the graph shown. The maximum possible total profit this monopolist that
charges only one price can earn is:
A. $0.
B. $60.
C. $120.
D. $240.
Answer:
For years, Amazon.com, which began as an Internet bookseller, had no profits and was
incurring annual losses. Still, the stock market valued the company very highly. One
reason for this was that investors believed that:
A. Amazon.com was in a winner-takes-all market.
B. Amazon.com faced fierce foreign competition.
C. the Internet was a perfectly competitive market.
D. on the Internet brand recognition is unimportant.
Answer:
RECAP is a type of nudge that stands for:
A. record, evaluate, and compare alternative prices.
B. replay, enumerate, and contrast active policies.
C. reevaluate, enlist, and compare attractive products.
D. restate, enjoy, and choose alternative products.
Answer:
Refer to the following graph.
The point on the graph corresponding to the socially optimal output per year and the
price sellers must receive to make that amount available is shown by point:
A. G.
B. H.
C. I.
D. K.
Answer:
Consider a market for fish whose market demand and market supply for fish are
specified as Qd = 300 – 2.5 P and Qs = – 20 + 1.5 P respectively. The government
decides to impose a price ceiling of $50 per ton. What would be the resulting market
distortion?
A. Shortage of 120 tons of fish
B. Shortage of 175 tons of fish
C. Surplus of 120 tons of fish
D. Surplus of 175 tons of fish
Answer:
Microeconomics includes the study of:
A. inflation.
B. unemployment.
C. business cycles.
D. a firm’s pricing policies.
Answer:
The international organization whose primary function is to promote free and fair trade
between countries worldwide is the:
A. WTO.
B. IMF.
C. NAFTA.
D. EU.
Answer:
When the Sarbanes-Oxley Act that established new accounting rules was passed,
analysts suggested that the new rules would not improve protections for the investing
public, but it would result in more work for accountants. If the professors are right,
these regulations are an example of:
A. laissez faire.
B. demerit goods.
C. government failure.
D. comparative advantage.
Answer:
Two members of the Kenyan parliament from coffee-growing areas said that no firm
should have a monopoly to market Kenyan coffee. The retail coffee company Tetu
Coffee has sparked a storm in the industry by promising to earn the country Sh400
billion annually if given exclusive licenses to market Kenyan coffee. The members of
parliament said the coffee bean farmers should be free to sell their beans to the highest
bidder.
Read the text above to answer this question. If all coffee growers had to sell their
produce to Tetu Coffee, this would be a(n):
A. natural monopoly.
B. price-discriminating monopoly.
C. oligopoly.
D. monopsony.
Answer:
Expected economic profit per unit is equal to:
A. expected price.
B. expected average total cost.
C. the difference between expected price and expected average total cost.
D. the difference between expected total revenue and expected total cost.
Answer:
When Churchill County residents voted whether to continue allowing two brothels to
operate, the government was acting as:
A. referee.
B. actor.
C. big spender.
D. public goods supplier.
Answer:
“The problem of getting people to buy car insurance is best solved by the market.” This
belief belongs to which type of economist?
A. Behavioral
B. Traditional
C. Modern
D. Keynesian
Answer:
What does NAFTA stand for?
A. North African Fair Trade Association
B. North Atlantic Favored Trade Association
C. North Atlantic Flat Tax Association
D. North American Free Trade Agreement
Answer:
A monopolist will hire workers up to the point at which the wage equals the marginal:
A. physical product of labor.
B. physical product of labor times the price of output.
C. physical product of labor times marginal revenue.
D. cost of labor.
Answer:
Japan, Germany, France, Britain, and the United States meet to try to coordinate their
economic policies. This informal association is called:
A. the WTO.
B. the Group of Five.
C. the IMF.
D. the OECD.
Answer:
Refer to the table shown. A firm would be least likely to hire:
A. 6 workers.
B. 7 workers.
C. 8 workers.
D. 9 workers.
Answer:
If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00
to $5.00 will cause an increase in quantity:
A. supplied, a decrease in quantity demanded, and the alleviation of a shortage.
B. demanded, a decrease in quantity supplied, and the alleviation of a shortage.
C. supplied, a decrease in quantity demanded, and the alleviation of a surplus.
D. demanded, a decrease in quantity supplied, and the alleviation of a surplus.
Answer:
In practice, regulatory boards try to set the price of a natural monopoly so that price
covers a normal return on capital investment. As a result:
A. there is an incentive to use less equipment.
B. there is an incentive to use more equipment.
C. the incentive to use equipment stays the same.
D. the price of equipment should decrease.
Answer:
If U.S. workers are paid $16 an hour and Indian workers are paid the equivalent of $4
an hour but U.S. workers can produce four times as many goods as Indian workers in
the same amount of time:
A. workers in the United State are paid too much.
B. production will migrate to the United States.
C. production will migrate to India.
D. there is no reason to move production from the United States to India.
Answer:
In the United States, the outsourcing of service jobs such as those in call centers has
become a political issue. How do economists typically view outsourcing?
A. It helps both countries in the long run.
B. It hurts both countries because the United States loses jobs and the employees of the
call center are exploited with low wages.
C. It helps the United States but hurts the country with the low-cost labor.
D. It helps the country getting the jobs but hurts the United States.
Answer:
Refer to the graph shown, which shows total product. At point A:
A. marginal product is at its minimum point.
B. marginal product is at its maximum point.
C. marginal product is zero.
D. average product per worker is at its maximum point.
Answer:
Refer to the graph shown. Which supply curve is inelastic?
A. A
B. B
C. C
D. None of the curves
Answer:
A good that people buy only to make them look better than their neighbors is called a:
A. show-off good.
B. relative position good.
C. conspicuous consumption good.
D. McGood.
Answer:
Which of the following is an example of screening?
A. Selling pollution permits to polluters to induce the lowest-cost pollution reducers to
cut back on pollution
B. Reducing pollution to the point at which the marginal cost of the pollution equals the
marginal benefit
C. A car buyer asking the seller if the car is a lemon
D. An employer requiring job applicants to provide references
Answer:
When four Infineon Technologies executives participated in an international conspiracy
to fix prices for computer memory chips, they were acting with other firms as:
A. if they were in a contestable market.
B. if they faced kinked demand curve.
C. a cartel.
D. an industry with monopolistic competition.
Answer:
If civil war broke out in China, causing interest rates and income to drop:
A. the demand for yuan would decrease and the supply of yuan would increase.
B. the demand for yuan would increase and the supply of yuan would increase.
C. the demand for yuan would decrease and the supply of yuan would decrease.
D. the demand for yuan would increase and the supply of yuan would decrease.
Answer:
Refer to the graph shown. The Lorenz curve showing the most income inequality is
A. A.
B. B.
C. C.
D. D.
Answer:
Prostitution is legal in Churchill County, Nevada, but a referendum threatened to close
two brothels (prostitution businesses) in that county. What idea from Chapter 1 of the
text does this story best illustrate?
A. Sunk costs do not matter in making decisions.
B. Marginal revenue should equal marginal cost.
C. Social and political forces sometimes rein in market forces.
D. Microeconomics and macroeconomics are very much interrelated.
Answer:
Anna is expecting a child but has decided that she is not ready to be a mother. She
chooses to sell her newborn to Bob and Sue, a couple who have been unable to
conceive a child of their own but want one desperately. This is an example of a trade
that:
A. would never be permitted in any society.
B. may benefit each party but cannot be considered efficient.
C. may benefit each party but may not be permitted in a society that believes selling
babies is morally wrong.
D. should be permitted as long as each party enters into the agreement voluntarily.
Answer: